The Commerce Department announced an end to the worst recession in decades today, as the third quarter of 2009 showed an annualized growth rate of 3.5%. That beat analyst expectations, which had floated around 3.0-3.3%. Federal government and consumer spending accounted for most of the growth:

The economy grew in the third quarter for the first time in a year as consumer spending and investment in new home-building rebounded, data showed on Thursday, unofficially ending the worst recession in 70 years.

The Commerce Department, in its first estimate of third-quarter gross domestic product, said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007, after contracting 0.7 percent in the April-June period.

The growth pace in GDP, which measures total goods and services output within U.S. borders, was above market expectations for a 3.3 percent rate. The economy last grew in the second quarter of 2008.

That may also be the bad news. Sales of new homes fell last month, and inventories are not growing. With the government tax credit expiring, those new-home sales and construction will likely fall off. The third-quarter growth in that area will almost certainly represent sales shifted from future quarters, which means that the next quarter will get negatively impacted from this growth.

One key indicator continued to move downward significantly, although Reuters only reports it in the final paragraph:

In other words, what we had in the third quarter was not long-term growth based on solid investment in business. We had a flurry of federal spending and consumer behavior predicated on highly temporary government interventions, like Cash for Clunkers and the homebuyer tax credit. That may be enough to make the administration look good for the next three months, but only for that long if they don’t stimulate real investment instead of using these gimmicky programs. If we have a double dip recession after these gimmicks end, Barack Obama won’t have George Bush to kick around any longer on the economy. He’ll own it after this.

Update: In an article headlined by the AP that “First-Time Jobless Claims Drop Less Than Expected,” it turns out that they haven’t dropped hardly at all:

The number of people claiming jobless benefits for the first time dropped less than expected last week, evidence that the labor market remains weak even as the economy is recovering.

The Labor Department said Thursday its tally of newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000. Analysts expected a steeper drop to 521,000, according to a survey by Thomson Reuters.

The report comes the same day the Commerce Department said the economy grew at a 3.5 percent pace in the July-September quarter, snapping a streak of four straight quarters of decline. But the economy isn’t growing quickly enough to spur much hiring.

Joblessness is always a lagging indicator, but the downturn in investment in Q3 shows that the “growth” was more gimmick than reality — which is another reason why joblessness continues to increase.